Bucking the ongoing trend for open property funds, DEGI Deutsche Gesellschaft für Immobilienfonds mbH has reported a positive net sales revenue for 2006. With net sales of 177 million euros, the preceding year’s result was comfortably exceeded.
This encouraging sales performance was crucially due to progressive widening of the range of funds available, which besides the classical GRUNDWERT-FONDS is now, with DEGI INTERNATIONAL, better equipped to seize international investment opportunities, and with the funds of the BUSINESS family is meanwhile also targeting institutional investors and affluent private customers.
The volume being managed in open public property funds rose to around 6.8 billion euros. Thus in 2006 DEGI upped its market share to 9 percent, and climbed to fourth place in the rankings for open property fund companies in Germany.
DEGI: Growing market share and positioning in the top 5
Solid sales based on international focus and products for institutional investors / Transaction volume doubles up to 1.7 billion euros / Strategic alliance in asset and portfolio management
Transaction volume dramatically increased, letting levels up by 28 percent
In 2006, the company’s portfolio management was again very active: in 21 transactions, it bought and sold properties worth around 1.7 billion euros. Compared with the preceding year, this means more than a doubling.
With 53 percent of the volume, DEGI INTERNATIONAL was the major focus for transactions, followed by 27 percent for the GRUNDWERT-FONDS. Approximately 20 percent is already being accounted for by the younger funds of the BUSINESS category.
Over 1.4 billion euros or four-fifths of the volume was turned over abroad. In contrast to the preceding year, German properties were back on the shopping list, although the volumes of sales and purchases involved more or less balanced out.
Letting levels, too, rose again in 2006, reaching 228,000 square meters, corresponding to an increase of 28 percent over the preceding year. With 200,000 square meters, the GRUNDWERT-FONDS was the major focus for new and follow-up tenancies. The largest single item was letting 61,000 square meters of office space to the Deutsche Bahn AG in Frankfurt.
With 53 percent of the volume, DEGI INTERNATIONAL was the major focus for transactions, followed by 27 percent for the GRUNDWERT-FONDS. Approximately 20 percent is already being accounted for by the younger funds of the BUSINESS category.
Over 1.4 billion euros or four-fifths of the volume was turned over abroad. In contrast to the preceding year, German properties were back on the shopping list, although the volumes of sales and purchases involved more or less balanced out.
Letting levels, too, rose again in 2006, reaching 228,000 square meters, corresponding to an increase of 28 percent over the preceding year. With 200,000 square meters, the GRUNDWERT-FONDS was the major focus for new and follow-up tenancies. The largest single item was letting 61,000 square meters of office space to the Deutsche Bahn AG in Frankfurt.
Profiting from the trend towards indirect property investments
The overlying trend towards convergence between the property and capital markets is the global growth driver for indirect property investments. But in Germany growth is predicted to be particularly vigorous, since on an international comparison the country still exhibits a high proportion of owner-occupied corporate properties.
As surveys reveal, part of the growth will be accounted for by new stock-exchange-listed vehicles like the REIT. But DEGI’s management also sees growth opportunities in other indirect forms of investment, such as special property funds, innovative open public property funds aimed specifically at large investors, plus products from other legal systems.
According to the Speaker of DEGI's Management Board, Bärbel Schomberg, DEGI is able to implement optimum product strategies for its customers, and sees itself as well positioned: "Both our research operations and our new product launching process through Allianz Global Investors are rigorously geared to the dynamics of the international capital markets."
In addition to that, DEGI wants to broaden its activities in the field of third party asset and portfolio management in 2007. To this end, the company is already in promising talks with different possible partners. With the Australian property group Investa, DEGI has already signed a memorandum of understanding under which the two companies aim in future to form a strategic alliance for building up a start portfolio and handling current asset and portfolio management of the properties for the other company in their own home regions. The plan is thus for Investa to function as an Australian investment platform for DEGI and vice versa.
As surveys reveal, part of the growth will be accounted for by new stock-exchange-listed vehicles like the REIT. But DEGI’s management also sees growth opportunities in other indirect forms of investment, such as special property funds, innovative open public property funds aimed specifically at large investors, plus products from other legal systems.
According to the Speaker of DEGI's Management Board, Bärbel Schomberg, DEGI is able to implement optimum product strategies for its customers, and sees itself as well positioned: "Both our research operations and our new product launching process through Allianz Global Investors are rigorously geared to the dynamics of the international capital markets."
In addition to that, DEGI wants to broaden its activities in the field of third party asset and portfolio management in 2007. To this end, the company is already in promising talks with different possible partners. With the Australian property group Investa, DEGI has already signed a memorandum of understanding under which the two companies aim in future to form a strategic alliance for building up a start portfolio and handling current asset and portfolio management of the properties for the other company in their own home regions. The plan is thus for Investa to function as an Australian investment platform for DEGI and vice versa.
Successful start to the year, and new growth with special funds
In January 2007, DEGI had already collected more than 120 million euros net, without calling investors' moneys for the two BUSINESS funds. Under the fund concept involved, these are collected in cash-calls immediately before the actual purchase of a property. For this product category, with a minimum investment volume of 500,000 euros, the company sees significant growth potential before the end of this year.
The DEGI GERMAN BUSINESS fund, in particular, has been tasked with swiftly putting together a half-billion-euro German portfolio that is appropriately diversified both regionally and in terms of utilisation category. After DEGI launched its first special property fund in 2006, it plans to further expand its business in 2007 with this classical vehicle for institutional investors.
"Our strengths in terms of research and acquisition are being clearly perceived by this target group. Specifically, we’re already talking to various interested parties about a special fund for several investors tasked with investing in retail properties all over Europe", explains Bärbel Schomberg.
The DEGI GERMAN BUSINESS fund, in particular, has been tasked with swiftly putting together a half-billion-euro German portfolio that is appropriately diversified both regionally and in terms of utilisation category. After DEGI launched its first special property fund in 2006, it plans to further expand its business in 2007 with this classical vehicle for institutional investors.
"Our strengths in terms of research and acquisition are being clearly perceived by this target group. Specifically, we’re already talking to various interested parties about a special fund for several investors tasked with investing in retail properties all over Europe", explains Bärbel Schomberg.
Market developments boost German products
For Germany’s commercial property market, DEGI is optimistic, and once again sees potential for higher rentals in an environment of shrinking vacancies and rising prices. However, the upturn on the German commercial property market will not be evenly distributed.
"The DEGI GERMAN BUSINESS, thanks to its research-based investment process, is accordingly the right product at the right time, because we prioritise structured selection of properties with disparate utilisation categories in both investment centres and regional locations", says Schomberg.
But the improved macro-economic situation will also provide a definite boost for the existing, highly diversified portfolio, centred around Germany, like the GRUNDWERT-FONDS, is DEGI’s firm conviction.
As with all content published on this site, these statements are subject to our Forward Looking Statement disclaimer, provided on the right.
"The DEGI GERMAN BUSINESS, thanks to its research-based investment process, is accordingly the right product at the right time, because we prioritise structured selection of properties with disparate utilisation categories in both investment centres and regional locations", says Schomberg.
But the improved macro-economic situation will also provide a definite boost for the existing, highly diversified portfolio, centred around Germany, like the GRUNDWERT-FONDS, is DEGI’s firm conviction.
As with all content published on this site, these statements are subject to our Forward Looking Statement disclaimer, provided on the right.
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